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By MARY K. BLEWITT
.Arundel Newspapers Richmond Bureau
RICHMOND — The 1989 General Assembly approved legislation last week that provides an income exclusion of up to $16,000 of retirement income for taxpayers 55 years of age and up.
The $69 million plan is a product of the four-day special session called by Gov. Gerald L. Rallies to resolve the pension tax dilemma. The sun had set in Richmond April 28 when Virginia lawmakers finally passed the proposal submitted by the House-Senate conference committee.
That morning, when the General Assembly convened, most members expected to be on their way home by noon; but Richmond’s rush-hour traffic had waned before the Assembly reviewed the plan that eventually passed.
Under the legislation, about 350,000 private and federal retirees will receive a tax break for the first time. However, about six percent of state and local government retirees will be taxed for the first time in almost half of a century.
Four out of five pensioners will receive full and immediate relief under the compromise plan. Taxpayers whose retirement income is $16,000 or less are entitled to tax-free pension benefits.
For those retirees with between $16,000 and $40,000 retirement income, the tax break is phased out $1 for each $3 of retirement income over the $16,000. Retirees making more than $16,000 are not, however, entitled to their full benefit this year.
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